Suppose That Topstone Industries Has a Cost of Equity of 14

Multiple Choice

Suppose that Topstone Industries has a cost of equity of 14% and a cost of debt of 9%. If the target debt/equity ratio is 75%, and the tax rate is 34%, what is Topstone's weighted average cost of capital (WACC) ?

A) 6.6%
B) 7.9%
C) 8.4%
D) 10.5%
E) 10.9%